SRINAGAR -  An India army soldier and three suspected militants, including the nephew of a top militant leader leader, were killed in a gunbattle in Indian-held Kashmir.

Indian forces surrounded a home in the southern town of Pulwama late Monday night after being tipped off about the presence of senior commanders from the Jaish-e-Mohammad (JeM) group.

"Three terrorists belonging to Jaish-e-Mohammad (JeM) outfit and an army soldier were killed in the encounter which raged last night," Munir Ahmed Khan, inspector general of police, told AFP on Tuesday.

Two of the militants killed in the firefight were Pakistanis and one Indian, police claimed.

One of the dead militants was identified as Talha Rasheed, nephew of JeM founder Maulana Masood Azhar. "Maulana Talha Rasheed along with two mujahideen embraced martyrdom in a clash with the Indian army in Pulwama on Monday," a source from the militant group told AFP.

Indian forces seized weapons and ammunition including an assault rifle used by NATO forces in Afghanistan, the first of its kind detected in Kashmir, police said.

The skirmish was the latest in a string of deadly shootouts between the Indian forces and suspected insurgents amid an upsurge in violence in the restive Himalayan region. There were dozens of civilian casualties in recent violence.

Kashmir has been divided between India and Pakistan since the end of British colonial rule in 1947 but both claim the territory in full.

India accuses Pakistan of sending militants into Kashmir to attack its forces. Islamabad insists it provides diplomatic, not armed, support to Kashmiris and backs their claim to self-determination.

Hundreds of thousands of people, mostly civilians, have died in an armed insurgency that erupted in 1989.